Samsung Infringes Four Apple Patents, Trade Judge Says

Steve Jobs, chief executive officer of Apple Computer Inc., delivers his keynote address as an image of the Apple iPhone is projected behind him during MacWorld in San Francisco in 2007. Photographer: Eric Slomanson/Bloomberg

Oct. 25 (Bloomberg) -- Samsung Electronics Co. lost the
first round of a U.S. trade case brought by Apple Inc., its
second big defeat this year in America as the companies battle
worldwide over smartphone and tablet computer technology.

Samsung infringes four patents, including one for the front
face of the iPhone and one for touch-screen technology co-invented by Steve Jobs, U.S. International Trade Commission
Judge Thomas Pender said in a notice yesterday on the agency’s
website. The judge’s findings are subject to review by the full
commission, which has the power to halt products at the U.S.
border and is scheduled to finish its investigation by Feb. 25.

The case is one of more than three dozen between the makers
of about half of the world’s smartphones. Samsung, which lost a
$1 billion jury verdict in August against Apple, is challenging
a different ITC judge’s findings that its own patents weren’t
infringed by Apple. The Korean company has had more success in
other countries, including a victory yesterday in The Hague.

“People see what’s happening in the other countries, but
here in the U.S., every time they go up against Apple, they
lose,” said Will Stofega, a program manager at Framingham,
Massachusetts-based researcher IDC. “Samsung will continue to
fight. In the long run, this cult of Apple may not be a good
thing to have.”

The judge’s findings will become public after both sides
get a chance to redact confidential information. If the
commission agrees with Pender and orders a halt on imports, the
action would be reviewed by the U.S. president, who can overturn
the ban on public-policy grounds. An appeals court would review
the overall case.

Initial Determination

“If left to stand, this initial determination could lead
to fewer choices, less innovation, and potentially higher prices
for the American consumer,” said Adam Yates, a U.S.-based
spokesman for Samsung. “We remain confident that the full
commission will ultimately reach a final determination that
affirms our position that patent law must not be manipulated to
give one company a monopoly over rectangles with rounded
corners, or technology that is being improved every day by
Samsung and other companies.”

Kristin Huguet, a spokeswoman for Cupertino, California-based Apple, had no immediate comment.

Apple’s iPhone is the top-selling smartphone in the U.S.,
with 34 percent of the American market in August, almost double
Samsung’s 18 percent, according to market researcher ComScore
Inc. Samsung is the world leader with more than a quarter of
global mobile phones sales compared with Apple’s 17 percent.

Smartphone Sales

The two companies have run up hundreds of millions of
dollars in legal bills in their patent disputes. Apple’s lawyers
have argued it revolutionized the smartphone industry when it
introduced the iPhone in 2007, only to see copycats from Samsung
and other companies making handsets that run on Google Inc.’s
Android operating system.

At stake is a market that Bloomberg Industries said grew 62
percent last year to $219 billion. More than 1 billion people,
or about one in seven people worldwide, had a smartphone in the
third quarter, according to an Oct. 17 report by researcher
Strategy Analytics. While it took 16 years to reach that
milestone, the group estimates that another billion people will
have smartphones within the next three years.

“It hasn’t really slowed down Samsung that much -- they
continue to do quite well,” said Shaw Wu, an analyst with
Sterne Agee & Leach Inc., who has a buy rating on Apple shares.
“These companies still have to run their business as usual and
almost pretend nothing has happened. It’s going to take several
years and hopefully not decades in the courts.”

Jobs’s Patent

Among tablet computers, Apple had about 70 percent of the
market in the second quarter, compared with 9.2 percent for
Samsung and 4.2 percent for Amazon.com Inc., according to IHS
ISuppli.

The design patent found to be infringed is for the flat
front face with wider borders at the top and bottom and a
lozenge-shaped speaker slot above the display screen. The other,
in which no violation was found, is for the shape of the phone.

The Jobs patent is being reviewed by the U.S. Patent and
Trademark Office to confirm whether it covers a new invention.
Also found to be infringed were a patent that covers the
translucent images for applications displayed on a screen, and
one to detect when headsets are plugged in. A second patent for
headset-jack detection wasn’t violated, the judge said.

No Disruption

The trade commission has twice before forced companies to
alter foreign-made smartphones if they wanted to keep selling
them in the U.S. HTC Corp. phones were held up at the border in
May after Apple won a trade case, and the company has an
enforcement action pending that accuses HTC of violating the
trade agency’s exclusion order. Google’s Motorola Mobility unit
was ordered to remove a feature to coordinate schedules from its
phones after it was found to infringe a Microsoft Corp. patent.

Even if the commission were to order an import ban, it
would likely give Samsung time to work around the patents to
ensure there is no disruption to consumers and carriers, Rodney
Sweetland, a patent lawyer with Duane Morris in Washington who
specializes in ITC cases, said before the decision.

Samsung has submitted documents to Pender about a way to
change its designs to address the dispute, though the papers are
confidential so it isn’t known what changes to its phones would
be involved. Apple is seeking to block U.S. imports of more than
a dozen models of Samsung phones and tablet computers, including
Galaxy Tab, Galaxy Nexus, Galaxy SII, and Galaxy Note.

Posting Apologies

Samsung has had better success outside the U.S. in its
legal clashes with Apple. In addition to a non-infringement
ruling from The Hague, a Tokyo judge in August ruled that
Samsung didn’t infringe Apple’s Japanese patent for
synchronizing music and video data.

Apple was ordered to post apologies on its U.K. website for
claiming that Samsung’s Galaxy tablet computers copied a design
for the iPad when a London court found they hadn’t. A South
Korean court in August said both companies had violated each
other’s patents on some phones and tablet computers.

Samsung, based in Suwon, South Korea, also got a boost when
a U.S. appeals court on Oct. 11 overturned an order that would
have prevented Samsung from selling the Galaxy Nexus phone in
the U.S. while another Apple patent case is pending. The court
said that such orders could be imposed only if the patented
invention is something that drives sales, not a single feature
of a multicomponent device.

The Apple case against Samsung is In the Matter of
Electronic Digital Media Devices, 337-796, and Samsung’s case is
In the Matter of Electronic Devices, Including Wireless
Communication Devices, Portable Music and Data Processing
Devices, and Tablet Computers, 337-794, both U.S. International
Trade Commission (Washington).